Sam Zell’s Equity Office Properties (EOP) is to take over fellow US company Spieker Properties in a $7.2bn merger.
The deal will see EOP grow to a $28bn office company, owning 11.52m m2 of offices across 616 buildings in the US. EOP is already the largest publicly held owner and operator of office space in the US with 9.2m m2 of space in 380 buildings.
Spieker has 3.6m m2 of space in California and the Pacific Northwest. EOP will also acquire Spieker’s 1.25m m2 industrial portfolio and its 157,900m2 of development projects.
EOP will pay $1.085bn in cash and issue around 118.6m new EOP shares. The company will also take on approximately $2.1bn in debt and $431m in preferred stock. EOP will gain a break-up fee of $160m if the deal is not completed within certain conditions.
The takeover increases the company’s presence in its key West Coast markets of San Francisco Peninsula, San Jose, Los Angeles, Orange County and Seattle.
For each Spieker share, shareholders will receive $13.50 in cash and 1.49586 shares in EOP.
Sam Zell, chairman of the board of EOP, said: “The merger is consistent with the strategy that Equity Office has articulated since we went public in mid-1997. We have focused on building critical mass in high job-growth office markets with barriers to new supply, the hallmark of Spieker’s portfolio.”
